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Hydro One president gets $3M severance

TORONTO - The president of Hydro One resigned yesterday and walked away with a $3-million severance package only four days after Ontario's Auditor-General raised concerns about the use of corporate credit cards at the company.

Tom Parkinson is the second head of the Crown agency in a row to lose his job over expense- account controversies. His predecessor, Eleanor Clitheroe, was fired after her salary, severance package and expense claims raised a political furor in 2002.

"I believe Mr. Parkinson's departure is in the best interest of Ontario ratepayers, Hydro One and its employees," Dwight Duncan, the Energy Minister, said yesterday.

"The board has decided to honour the severance provisions outlined in his contract. I'm advised that it is, in all probability, the least costly resolution under these circumstances."

Mr. Parkinson came under fire before a legislative committee earlier this fall for his $1.6-million salary, which made him the highest paid public servant in the province, and his decision to travel on several occasions to and from cottage country on the transmission utility's helicopter. On one occasion, his young son travelled with him.

His undoing, however, came this week in the aftermath of a provincial Auditor-General's report that raised concerns about credit card practices at the utility.

Auditor Jim McCarter reported that Mr. Parkinson used his secretary's corporate credit card to bill $45,000 in travel and other expenses that he subsequently personally approved.

The charges included $11,000 for a trip to Australia that was provided for in the Australian-born Mr. Parkinson's contract as well as $15,000 for an office move. Mr. McCarter also noted that throughout 2005, Hydro One employees charged more than $127-million to corporate credit cards, but expense reports and receipts were often insufficient to determine the legitimacy of the purchases.

Both Premier Dalton McGuinty and Mr. Duncan expressed displeasure with the situation and insisted changes to Hydro One's corporate culture are long overdue.

Yesterday, in a press release, the Crown corporation's board of directors, chaired by the province's former chief bureaucrat Rita Burak, said, "Tom leaves with the admiration and best wishes of our board."

They also expressed "full and ongoing confidence" in Mr. Parkinson's leadership.

"However, in consultation with Tom and in light of the circumstances, we have decided, with deep regret, to accept Tom's resignation."

Mr. Duncan insisted that he has "confidence in the ability of the board to manage the affairs of the company."

The Minister said he will rely on the board to conduct the search for a new president and to recommend appropriate compensation for the new recruit.

He ruled out setting an upper limit for pay.

New Democrats at Queen's Park have noted that the head of Quebec Hydro earns $480,000 per year while the president of B.C. Hydro receives $405,000 annually and that they are responsible for both electricity generation and transmission in their respective provinces.

In Ontario, Hydro One oversees the delivery of electricity while Ontario Power Generation produces most of the power.

OPG president Jim Hankinson will be paid $830,000 this year plus a bonus of $830,000 if he meets performance targets.

Conservative leader John Tory said in a statement yesterday that instead of changing the culture at Hydro One the McGuinty government is "allowing a culture of entitlement and disrespect for taxpayers.

"If Mr. Parkinson really quit, he should not get severance. In Northern Ontario where high hydro rates were a big contributor to thousands of people losing their jobs, they're not getting severance like this."

NDP leader Howard Hampton demanded a public inquiry to investigate salaries and spending practices at the power transmission utility as well as at other government agencies involved in the province's electricity system.

He dismissed suggestions that Hydro One needs to pay high salaries to attract the best and the brightest.

"Other provinces run their hydro electric utilities on a much more frugal basis.

Hydro One's credit card practices came under scrutiny this year after the McGuinty government granted the provincial auditor expanded powers to conduct value-for-money audits at institutions in the broader public sector and Crown corporations in addition to the provincial ministries that traditionally come under his scrutiny.

Laura Formusa, Hydro One's general counsel and a member of the board of directors, has been appointed to act as the utility's acting president until a full-time replacement for Mr. Parkinson can be found.

Ms. Clitheroe came under fire after she spent a reported $330,000 on limousines over three years, sometimes using the service to transport her nanny and children to appointments. She also had a company car.